Detroit Evening Report: Michigan Supreme Court says local governments must pay back profits from foreclosed homes

The Michigan Supreme Court said Monday its 2020 decision stopping local governments from keeping profits from the sale of foreclosed homes can be applied retroactively.

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The decision means anyone who lost their home due to unpaid taxes prior to 2020 — when the decision was made — could receive any money made by the county on the sale of their foreclosed home.

Previously, counties had been able to keep all money made from a foreclosure sale, even if the sale far exceeded the amount of unpaid property taxes.

Christina Martin, an attorney at the Pacific Legal Foundation who argued the case for former property owners, told the Associated Press that local governments were “essentially stealing from people.”

“It doesn’t matter if it’s going to be expensive to pay them back,” she said. “They have to pay them back.”

The Supreme Court in 2020 said the practice violated the Michigan Constitution.

Writing for the court, Justice Brian Zahra said the case “involves governmental violation of the constitutional rights of numerous individuals.”

He said “we are not without sympathy” toward communities that kept the surplus cash because state law had allowed it.

“Nonetheless, while the problem originated with the Legislature,” Zahra wrote, “at the foundation of our government is the precept that no state officer or local government can justify a constitutional violation on the basis of a statutory directive.”

The Michigan Municipal League, which represents local governments, says complying with the ruling could cost local governments hundreds of millions of dollars, and communities should not be penalized for following what was allowed under law. 

Associated Press reporter Ed White contributed to this report.

Other headlines for Tuesday, July 30, 2024:

• Leaders within the Asian American community are celebrating a $1 million investment into Detroit’s former Chinatown neighborhood.
• The Belle Isle Aquarium will have extended hours of operation during the month of August thanks to a $10,000 contribution from Comerica Bank.
• American Indian Health and Family Services is hosting a free traditional Native American powwow in Detroit this weekend, in collaboration with Wayne State University. 

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